Homeowners stretched perilously

If the nation's real estate boom collapses, its first victims may well be low-income minorities and immigrants in a big US city like Boston.

That is the picture emerging here as foreclosures rise and the housing prices falter. More than one-quarter of Boston's mortgage-holders appear to be stretched thin financially, spending at least half their income on housing, according to an analysis of census figures. That's more than twice the national average and the highest of any major city except Miami.

The trend is especially worrisome, the analysis shows, because these vulnerable homeowners tend to be minorities and immigrants who, experts say, often hold the riskiest mortgage loans.

The threat has implications not only for Boston, whose population would have shrunk without an influx of immigrants, but for the US. A real estate slump could erode America's rate of homeownership, which has reached record levels in the past decade.

"Getting homeownership up is a good thing," says Andrew Sum, director at the Center for Labor Market Studies at Northeastern University in Boston. Many minorities and foreign-born residents became homeowners during this real estate boom. But boosting home ownership is not worth it for those at "risk of losing financial control," he adds.

Typically, homeowners should spend no more than 30 percent of their income on housing, financial planners say. Carmen, who used this pseudonym because she's embarrassed by her plight, is one of many Boston homeowners who are stretched much further.

A native of Puerto Rico, she and her husband, from El Salvador, bought a $342,000 home in the city's East Boston neighborhood in 2002. They could manage the mortgage. But then unexpected taxes in their contract pushed up their monthly payments - twice in a single year. Last June, her husband lost his job as a chef.

"It all came at once," Carmen recalls. "We were crying so much. We almost lost our home."

Then she took on more hours as a nursing assistant, and her husband found work as a marble-cutter. Now, they limit their cellphone calls. They rarely eat out and have cut out the weekend trips they used to take. Still, mortgage payments soak up almost all their income.